Wisconsin court reverses Osceola Bluffs decision, lets project proceed

Ruling cites recent law intended to make it easier for developers to get residential projects approved.

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Mock-up of Osceola Bluffs apartment building. (Gaughan Cos.)

Citing a law passed last year in Wisconsin that limited legal opposition to new housing projects, a panel of three judges this week reversed a lower court’s decision that blocked a proposed development on the St. Croix River bluff in Osceola. The state Court of Appeals has now cleared the way for the four-story apartment building at the village’s former hospital site, unless opponents take further action.

“While community concerns remain important in development discussions, this decision makes clear that standing to challenge these decisions in court requires demonstrable and specific harm,” said Osceola village administrator Devin Swanberg in a statement.

In the decision released on Wednesday, the court cited Assembly Bill 266, which was passed in June 2023 as part of a package that proponents said would make it easier to build more housing in the state. The law was passed at the same time the village of Osceola was making decisions about the development that would later be challenged in court (see timeline at bottom of article).

AB 266 strictly limited who can qualify to sue over a development proposal approved by a local unit of government. It says only a person who “sustains actual damages or will imminently sustain actual damages that are personal to the person and distinct from damages that impact the public generally” has legal grounds to stand on.

The village’s lawyers argued that the plaintiffs in this lawsuit did not meet the standard put forth in Bill 266.

“If [degradation of the natural, scenic, and historic qualities of the Village and the portion of the St. Croix River] can be characterized as damages, they are not personal to [St. Croix Scenic Coalition] but impact the public generally,” they wrote.

The appeals court agreed, overturning a district court ruling that halted the project last spring.

“Specifically, the Coalition alleged its members merely faced the possibility of future harm of a type that would affect the public generally rather than the required then-existing individual injury or reasonably certain future individual injury resulting from the local governing body’s decision to approve the application,” the court wrote.

Blufftop building

Diagram showing approximate sight lines from river to proposed Osceola Bluffs development. (Gaughan Cos.)

The Osceola Bluffs proposal calls for a 99-unit apartment building on the edge of the St. Croix River bluff. It would be four stories facing the river and three stories facing the street. During debate over the proposal in 2022 and 2023 and then in the lawsuit, its critics have said it would visually detract from a popular part of the St. Croix River, which is protected by state and federal law.

Supporters of the development proposal say it would finally clean up the dilapidated former hospital, a building that has been empty since 2007 and is in poor condition. They also point to a need for housing in Polk County and Wisconsin as a whole.

While proposal opponents say they support redevelopment of the site, they also feel the large building proposed will replace one eyesore with another. They also say the cost of apartments in such a location will likely be out of reach for people who need housing most.

The lawsuit claimed the village violated its own ordinances in approving the project, as well as state and federal laws specifically passed to protect the St. Croix River. Those issues are now moot, after the appeals court’s decision. The judges made it clear that by disqualifying the plaintiffs, they were not ruling on any of the case’s other merits.

“Because we conclude that the Coalition lacks standing pursuant to the relevant statutory provisions, we need not reach the remaining issues addressed by the circuit court,” the ruling reads.

Reaction to housing shortage

Wisconsin State Capitol (Pauliefred/Wikimedia)

Assembly Bill 266 was part of a package that was promoted as a way to clear hurdles for new housing in the state, which has a shortage of affordable units that some say is hurting employers and residents.

“Access to safe, reliable, and affordable housing statewide is an absolutely critical part of addressing Wisconsin’s long-standing workforce challenges,” said Gov. Tony Evers when signing the bill in June 2023.

Reducing legal challenges was seen as one way to expand affordable housing, which often receives the most opposition from neighbors.

“I’m encouraged by the package of bills proposed as a first step in addressing the issue,” Mary Pustejovsky, a Madison-based affordable housing advocate, told the Wisconsin Examiner when the legislation was introduced. “In particular, [AB 266] is promising.”

Affordable housing is typically defined as costing no more than 30 percent of the area’s median income. With Polk County’s median household income at $74,000, that means affordable housing should cost at most about $1,800 per month, if it is the type of affordable housing targeted by the 2023 legislation. The legislation itself included no definitions or exceptions for housing projects that would be above the affordability threshold, and Gaughan Cos. has not yet revealed pricing for the proposed Osceola Bluffs apartments.

In addition to a shortage of housing construction in Wisconsin, another trend that has contributed to inadequate stock is the rise of short-term rentals like Airbnb and VRBO. With the St. Croix Valley a popular tourism destination and the proposed Osceola Bluffs building offering scenic views located in a walkable downtown, it should be ideal for visitor lodging. The village currently has no ordinance limiting or regulating short-term rentals.

New legal landscape

St. Croix River at Osceola. (Greg Seitz/St. Croix 360)

Most of the support for the 2023 law came from realtors and builders, who should see lower legal costs and better odds of getting project approvals.

“One of the biggest barriers to new homebuilding in communities is the opposition from existing residents or NIMBYs [Not In My Backyard advocates],” Tom Larson, of the Wisconsin Realtors Association told legislators. “Regardless of what new development is being proposed, someone is bound to object.”

Larson cited several common concerns driving opposition to new development, including “loss of open space, increased density, traffic, overcrowding in schools, neighborhood character, property tax increases, or just change in general.”

With the Court of Appeals citing the new law, the case could serve as a critical test and precedent for how parks and public land will be protected in Wisconsin, how environmental laws will be enforced, and how housing will be developed.

The project’s Minnesota-based proposer celebrated the appeals court ruling and pledged to move forward quickly.

“Gaughan is excited to see this project to completion,” the company’s senior vice president Dan Hebert, told the Pioneer Press. He said construction is planned to begin next year.

The plaintiffs in the suit say they are reviewing the decision and considering next steps. The group could ask the Court of Appeals to reconsider or ask the state Supreme Court to review the ruling.

Timeline of legislative and village actions:

February 2023

Village receives preliminary plans for Osceola Bluffs proposal

March 7

Legislative hearing on statewide development difficulties

April 11

Village Board approves zoning changes to facilitate Osceola Bluffs proposal

May 16

Legislation introduced to restrict legal challenges to housing development

May 30

Rep. Magnafici added as co-sponsor of legislation to restrict legal challenges

June 13

Village Board approves three Conditional Use Permits for project

June 14

Legislation passed by State Assembly and Senate

June 22

Legislation signed by Governor

July 25

Village Board approves Osceola Bluffs development plan

August 23

Lawsuit filed over village approval of proposal


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4 responses to “Wisconsin court reverses Osceola Bluffs decision, lets project proceed”

  1. K. Lee Avatar
    K. Lee

    There are many issues that remain unaddressed that must have been out of the preview of this court. The neighborhood on River Street in Osceola will loose it’s charm, as the houses are old and quaint. Juxtaposition with this large modern structure is incongruent.Village residents asked the developer to make the project more in scale to the site and more in character with architecture of the neighborhood. They also asked if there could be fewer units 99 units is a lot, and because there is a lack of parking in this area. These issues were not addressed.
    Another issue is the visibility of the building from the mid line of the river, as it obviously is within view of the activities on the river. This is a federal requirement of the Wild and Scenic River Act of 1972 and could be addressed by the developer reducing the height of the building. To my knowledge, many trees will be cleared from the bluff in order to build, and this will make a stark view of the building from the river. The developer proposed planting new trees, but, trees take time to grow! This issue remains unaddressed.
    Since this is a federal requirement, both residents and commercial structures on both sides of the St.Croix River must comply and include this in their site construction plans.
    There seems to be a hadtr to build on this site and not address the issues that have been raised. While the Village is interested in getting the old hospital removed and looks forward to some additional tax revenue, they must be aware that many contributing tax psying members of “the Village” have unaddressed concerns about quality of life issues- the peace of their neighborhood, parking concerns, and a huge new commercial building wedged into their “residential” area. These are intended to be apartments and may also be overnight rentals. So, there is limited hope that many of these “renters” will become residents or actual “neighbors.” Therefore, the belief of many is that the neighborhood, and maybe even downtown could deteriorate, because the community will be disturbed.

  2. Stacey Pearson Avatar
    Stacey Pearson

    $1800 a month for “affordable” housing? You’ve got to be kidding me! There definitely is a shortage of TRUE affordable housing in the Osceola area as well as neighboring townships, and as a citizen of Osceola-one that works full time and pays rent-I can tell you that $1800 a month is something that MOST residents couldn’t afford, especially single income households. Putting up some fancy apartments on the river will only support gentrification and cause an even BIGGER housing problem for your lower to lower middle class residents. This is a tough economy! Time to open your eyes legislators!

  3. superkuh Avatar

    Cool. So as long as you operate at a large enough scale to damage everyone equally no one can stop you. Classic modern-Wisconsin legislation.

  4. Lisa l West Avatar
    Lisa l West

    Is the river really “protected”? Gaylord Nelsons efforts and success in law protecting our most precious element, seems to be “forgotten”or doesn’t apply anymore, or that was then…It was a huge thing and now it’s a thing of the past. It seems putting any type of housing within viewable shorelines, will be a mistake that will be acknowledged to late. If the council and county have the power to control the zoning and planning of these projects, it leaves the city’s tax paying citizens, detached from any say of future development.

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